Wednesday, February 27, 2013

What Explains the Racial Wealth Gap?, by Neil Shah, WSJ: White families
build wealth faster than black households... What explains this growing divide? ... The findings are the latest evidence that barriers in workplaces, schools and
communities — rather than personal attributes and cultural factors — may be
making it harder for blacks to accumulate wealth than whites over time. ...

Home ownership is the biggest contributor to net worth. But white families, the
researchers say, buy homes and start acquiring equity on average eight years
earlier than black families, largely because white families can lean on their
own families for help with down payments...

The recession had a disproportionately bad effect on blacks, researchers said.
“Half the collective wealth of African-American families was stripped away
during the Great Recession due to the dominant role of home-equity in their
wealth portfolios and the prevalence of predatory high-risk loans in communities
of color,” said Thomas Shapiro, director of the Institute on Assets and Policy.
“Borrowers of color are more than twice as likely to lose their homes.”

Meanwhile, accomplishments like job promotions and pay increases don’t appear to
pay off for black families the way they do for whites. ... Differences related
to inheritances, college education and unemployment also play a role. Whites are
five times more likely to inherit, while 80% of black students graduate with
debt compared with 64% for whites. “Similar college degrees produce more wealth
for whites,” Shapiro said.

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What Explains the Racial Wealth Gap?

Opportunity is far from equal:

What Explains the Racial Wealth Gap?, by Neil Shah, WSJ: White families
build wealth faster than black households... What explains this growing divide? ... The findings are the latest evidence that barriers in workplaces, schools and
communities — rather than personal attributes and cultural factors — may be
making it harder for blacks to accumulate wealth than whites over time. ...

Home ownership is the biggest contributor to net worth. But white families, the
researchers say, buy homes and start acquiring equity on average eight years
earlier than black families, largely because white families can lean on their
own families for help with down payments...

The recession had a disproportionately bad effect on blacks, researchers said.
“Half the collective wealth of African-American families was stripped away
during the Great Recession due to the dominant role of home-equity in their
wealth portfolios and the prevalence of predatory high-risk loans in communities
of color,” said Thomas Shapiro, director of the Institute on Assets and Policy.
“Borrowers of color are more than twice as likely to lose their homes.”

Meanwhile, accomplishments like job promotions and pay increases don’t appear to
pay off for black families the way they do for whites. ... Differences related
to inheritances, college education and unemployment also play a role. Whites are
five times more likely to inherit, while 80% of black students graduate with
debt compared with 64% for whites. “Similar college degrees produce more wealth
for whites,” Shapiro said.